Launch of the Tax-Free Childcare Scheme

It has been confirmed that the new Tax-Free Childcare Scheme (TFCS) will be launched on 28 April for parents of young children. All eligible parents will be able to join the scheme by the end of 2017.

The TFCS will support working families with their childcare costs. The new scheme will eventually replace the current salary sacrifice scheme and will be open to all qualifying parents including the self-employed. The scheme will also be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.

The scheme will be worth up to £2,000 per child each year and will be available to children under 12. For every 80p in the £1 contributed by parents an additional 20p or 20% will be funded by government up to a maximum of £10,000. Parents will be able to have one childcare account for each qualifying child. There will be extra benefits for disabled children until the age of 17. In order to be eligible to use the scheme parents will have to be in work, and each earning just over an average of £100 a week and not more than £100,000 each per year.

Parents already registered to use employer-supported childcare will be free to continue using their existing arrangements for as long as their employer offers it. Employers can offer the employer-supported childcare scheme themselves or use a specialist voucher company to run the scheme on their behalf. For some high earners and those with older children the voucher scheme may be more beneficial.

In addition, from September this year, parents of three and four year old children living in England will be able to apply for a new 30 hours free childcare offer, worth around £5,000 per child.

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